The Christmas period failed to 'make amends for a challenging year of sluggish retail sales growth', as consumers held back spending due to weak confidence.
Total UK retail sales grew by 1.7% in December, a significant dip from 6.9% in December 2022, and below the three-month average growth of 2.3% and the 12-month average of 3.6%.
However, total retail sales for 2023 increased by 3.6% from 2022, the British Retail Consortium found.
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The biggest increase in the three months to December 2023 was registered for food sales, which rose by 6.8% on a total basis. But food sales were still below the 12-month average of 8.1%.
The BRC noted that for the month of December, food was "in growth year-on-year".
Non-food sales, however, decreased by 1.5% on a total basis in the last quarter of 2023, compared with the 12-month average of -0.1%. The category declined in December as well.
In-store non-food sales fared a similar fate, decreasing by 1.3% on a total basis since December 2022, the BRC found, below the 12-month average of 1.6%.
Similarly, online non-food sales dipped by 0.8% in December, yet the figure was improved from -3% in December 2022. The trade association noted the figure was "shallower" than the three-month and 12-month declines of 1.7% and 2.8%, respectively.
Despite registering a small decrease, the proportion of non-food items bought online in December 2023 rose to 36.8% from 36.2% in December 2022.
Helen Dickinson, CEO of the British Retail Consortium, said the Christmas period failed to "make amends for a challenging year of sluggish retail sales growth", noting consumers have held back spending due to weak confidence.
Similarly, post-Christmas sales were "unsuccessful" in enticing spend in categories such as furniture and homeware, as households remained "cautious about making larger purchases", she noted.
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Dickinson continued: "Sales saw a slight uptick in the week leading up to Christmas as consumers scrambled to purchase last minute gifts, particularly online, due to the wet weather. In gifting, beauty products were the standout performer, and toys and gaming also sold well.
"2024 looks to be another challenging year for retailers and their customers, and spending will continue to be constrained by high living costs. Retailers will also have to juggle various cost pressures, including the rise to business rates this April.
"This will be compounded by other emerging issues, such as the disruption to shipments from the Far East via the Red Sea. Political parties must consider this backdrop when they set out their plans for retail in manifestos so they can help support the industry to grow, invest and serve customers."
Paul Martin, UK head of retail at KPMG, noted the figures for December 2023 were lower than the previous year, despite improvements to the economic backdrop and consumers having "more money in their pockets" than in the previous Christmas period.
He added: "As we start a new year, cautious consumers are battening down the hatches and retailers can expect to see significant downward pressures on demand in the opening months of this year, which will ease off by spring if the economic conditions continue to improve and confidence slowly returns."
